UK Department for Transport (DfT) announced (10-Dec-2009) revised plans to reform airport economic regulation, following a consultation period. Having considered responses to the consultation, the department intends to introduce as soon as parliamentary time will allow a package of reforms that will:

Modernise the statutory duties of the Civil Aviation Authority (CAA). The UK Government will replace the CAA’s existing duties with a single primary duty to promote the interests of end consumers of passenger and freight services at airports. In order to provide clarity about the additional factors the CAA need to take into account when making decisions, the government will also be introducing new subordinate duties;

Introduce a new licensing regime that is flexible and targeted. The new regime gives the regulator sanctions and enforcement powers to incentivise licensee compliance;

Introduce a new framework of merit based appeals to ensure the regulator is accountable for the decisions it makes;

Enhance passenger representation within the aviation sector. To ensure that passengers have an independent and influential advocate with an end-to-end journey perspective, the government will introduce legislation to make Passenger Focus the passenger representative body for aviation;

The department also announced (10-Dec-2009) proposals to reform the CAA's Air Travel Organisers' Licensing (ATOL) scheme to reflect changes in the holiday market and make it easier for those booking holidays to understand whether their trip is covered or not. The changes could see a new wider “flight-plus” category introduced, to make clear that anyone booking a flight and another holiday component will be protected by the scheme. [more]

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British Airways' decision to exit its only secondary Chinese route to Chengdu, in Jan-2017, might suggest the music is ending and the secondary long haul bubble is popping. There is added colour given the recent UK-China air service agreement expansion, and Brexit/British pound depreciation overhangs.

BA's exit does confirm market fundamentals: secondary city yields are low, and some routes are ahead of their time. Yet a number of factors unique to British Airways suggest caution in concluding that BA's Chengdu exit could foreshadow other withdrawals.